The “Authors at Google: Jon Gertner, “The Idea Factory” (AGTIF) and “CHM

Revolutionaries: The Idea Factory – Bell Labs and the Great Age of American
Innovation” (CRTIF) are videos of the author of the book, “The Idea Factory”, named
Jon Gerner. The AFTIF is a video of his speaking engagement at ‘Talks at Google’,
while CRTIF is a question-and-answer session at ‘CHM Revolutionaries’.

Jon Gerner is a New York Times Magazine writer. According to him, “The Idea
Factory”, is about the origins of modern communications as seen through the
adventures of several men in Bell Telephone Laboratories. The book narrates about
the innovation in the organization – how it happens, why it happens and who makes
it happen. The book focuses the stories in the Labs between the late 1930s and the
mid-1970s at the lives of Mervin Kelly, Jim Fisk, William Shockley, Claude Shannon,
John Pierce and William baker

In the beginning of 1900, AT&D has the 80 to 90% market share in its industry. It als
own one of the largest manufacturing company, Western Electric. In 1925, the Bell
Telephone Laboratories became shared research and development center of
companies under American Telephone & Telegraph Company (AT&T) and Western
Electric. From its establishment, Bell Labs has pioneered several inventions and
discoveries that are foundations businesses and technologies that built upon.
Example of inventions from Bell Labs, according to Jon Gertner are:
Transistors (point-contact and junction), silicon solar cell, information theory, digital
communications (transmission and switching, communication satellites (Eco, passive
and active), Unix operation system. and C+, CCD chip, charge coupled devices,
laser theory and cellular technology.

R&D arm of AT&T, employed most people and most valuable company at that time.
They own 80-90% of market share. They have enormous freedom to innovate
because it is connected to a company that has monopolistic power. They got more
than enough funding to hire the best people and acquire the best equipment they
need. They’re attachment to a monopoly company also allow them to focus on long
term projects and continuously experiment on science-based technology products.

Incremental innovation (life up, cost down – tremendous economic improvements).

In the late 1960s, Bell Labs employed about 15,000 people including 1,200 PhDs.

John Gerner also introduced a scientist named Davidson, Kelly’s best friend.
According to him, Davidson is not that good in engineering, but he can answer
difficult questions not like everyone else and give deeper understanding into
electronic devices and processes. Because of this trait, he become a model and
give help to his stapp to create a lot of improvements in their researches and
projects. (knowledge is very important aside from tinkering)

Another () is hired in the company named Shockley. In Shockley’s first meeting with
Kelly, Kelly explained about the problems about switches. He discussed that they are
slow, wear out a lot and expensive. He told Shockley that switches are essential part
of the products of Bell and it they can enable to replace them, it will improve the bell
labs products tremendously.

In 1941, Kelly build a team around Shockley to study the nature of semiconductors.
Their team is composed of physicists, theorists, experimentalists, chemists,
engineers and experts in different fields.

Kelly’s entire career and fame is based on his development of vacuum tube
technology. Supporting the development of semiconductor may make his career and
achievements irrelevant.

Transistors got a lot of interest from the public. However, they still have a lot of
manufacturability challenges. These manufacturability challenges got solved by the
introduction of junction transistor then field effect transistor.

The next story Jon Gatner talks is about the development the Bell Solar Cell. It is
developed by Fuller, a chemist who is developing a photo sensitive silicon wafer for
phone system, Pearson, an experimental physicist who is trying to develop a Silicon
power rectifier, and Chapin, who, at the same time, is looking for a way to solve his
problem of unreliable power source of repeater stations. These three scientists are
working from different divisions and buildings and at the right time and right place
they able to came out with the development of silicon solar cell or also known as bell
solar battery.

After telling stories of these scientists and their innovations, Jon Garner summarizes
his takeaways:
First, innovation response to needs and problems instead of formulation of random
ideas.
Second, ---
Third, invention is a very difficult and long process.
Fourth, innovation can from orchestrated mid-sized team, carefully created and
closely managed.

Fifth, we think we know the value of innovation, but we really don’t.

2. R&D Management

2.1 Radical R&D

A research and development team may produce different combinations of R&D
projects depending on the type of industry, resources available, capabilities and its
strategy. Some focuses basic or applied research which is directed toward gaining
scientific and engineering knowledge than may be useful in creating future products.
While some focuses on ‘development’ which is the use of knowledge gained from
research, directed toward the production of new and useful products (Science and
Engineering Indicators, 2008). Typically, R&D teams strategically mixed basic or
applied research and development projects into their R&D portfolio.

In line with the classification of research projects, (Roussel, Saad, & Erickson, 1991)
introduced three basic types of R&D that each has its own characteristics and
purpose. The three types of innovation they introduced are:
1. Incremental R&D - Small research and big development
2. Radical R&D - Large research and often large development
3. Fundamental R&D - Large research and no development

For the analysis of this case study, the researcher focuses on the description of
radical R&D. Radical R&D is intended on the discovery of new scientific and
engineering knowledge for a purpose of developing significantly new product.

Radical R&D combines an enormous amount of researches and development

projects to been able introduce a significantly different and new product or
technology breakthrough that has large potential value in the market.

Radical R&D typically begins as exploratory project or feasibility study for the
purpose of testing scientific concepts before applying it in developing projects.
Successful research may help to reduced uncertainty and mitigate risk before
entering the development phase. Being successful in fundamental R&D can give the
competitive edge of having the know how that no competitor has that will give an
image as leader in technology for many years. (Roussel, Saad, & Erickson, 1991)

2.2 First Generation Management of R&D

R&D has been studied for a long time in different contexts, markets and economies
over the years. It is evident that the R&D management context and operating
principles change throughout the years in relation to the changes in economy and
market demands (Nobelius, 2003).

Based on literature review of (Nobelius, 2003), there are five generations of R&D
processes. In line with the analysis of this case study, the researcher will focus on
the discussion of the first generation of R&D. The first generation of R&D is adapted
during the 1950 to mid-1960s. (Nobelius, 2003) described the first-generation R&D
as an ivory tower. According to him, the R&D process was linear and technology –
push oriented. In addition, (Roussel, Saad, & Erickson, 1991) discussed that in the
first generation, the R&D decides what products and technologies to be developed
without application and long-term business implications. The R&D create the
Moreover, the set activities, goals, time frame and budget are not planned and
organized in the first-generation R&D management. Finally, the R&D has almost no
interaction with the rest of the company and it focuses on scientific breakthroughs
and radical innovation.

2.3 Creating a productive and effective R&D organization

2.3.1 Creative Person and Work

To create a productive and effective R&D organization, maintaining the creativity of
the researchers and engineers, and formation of collaborative team with
complementary skills, knowledge and personality are important.

Sternberg and Lubart (1995) argue that there are six personal resources necessary
for creative work are intelligence, knowledge, thinking style, personality, motivation
and being in the right environment. According to them, these six attributes must have
to a minimal value for a person to be creative, but one of them does not have to be
high level. People can compensate for being low on one by being high on another
aspect.

2.3.2 Formation of Teams

There are many factors that need to be considered in creating and developing a
team. Pelz and Andrews (1966b) indicated that effective teams are cha support of
members for one another’s work, great respect for other members and
complementary skills, strategies and approaches. The team members must have
skills and attitude that are different and complementary.

Research teams that have members from different disciplines and cultures may have
problems in coordination, but it may also increase creativity

In addition, Leung and colleagues (2008) argue that multicultural experience can
contribute to creativity because it enables people to broaden the range of accessible
ideas and concepts, recognize that the same form can have different functions,
destabilize established associations, increase their readiness to seek out ideas from
diverse sources, and build greater cognitive complexity.
3. Technological Innovation and Commercialization

3.1 Competence-Enhancing Innovation versus Competence-Destroying

Innovation

Based on several researches and related literatures, there are many categories and
areas that innovation can be classified to. One approach is classifying innovation as
competence enhancing or competence destroying. A competence enhancing
innovation if it helps the company to build its existing competencies and capabilities.
This type of innovation can empower and encourage new innovations and
opportunities for a firm, market or industry. A competence-enhancing innovation is
an order of magnitude improvement in price, performance, or efficiency that builds
on existing know-how within a product or process class (Tushman and Anderson
1986, p. 442). Such innovations substitute for older technologies, yet do not render
obsolete skills required to master the old technologies. For example, electric
typewriters represented a competence enhancing innovation relative to mechanical
typewriters.

While a competence destroying innovation is when the innovation introduced does

not build on the firm’s existing competencies and capabilities and makes them
obsolete.
This type of innovation introduces new product or technology that cannibalize the
market share of existing products and technologies, make them obsolete or even kill
an entire industry. It requires new skills, abilities and knowledge in the development
and production of a product relative to those held by existing firms in an industry
(Tushman and Anderson, 1986)

As (Tushman and Anderson, 1986) note, a competence destroying innovation either

creates a new product class (e.g., xerography or automobiles) or substitutes for an
existing product (e.g., diesel vs. steam locomotives; transistors vs. vacuum tubes).

The identification whether the innovation is competence enhancing or competence

destroying is dependence on whose company perspective is being taken. An
innovation can be competence enhancing to one company and competence
destroying to one company.

3.2 Assessment and Evaluation of Inventions and their Commercialization

R&D is a long, complex and expensive process, especially inventing and developing
high-technology products. Moreover, aside from inventing the technology and
embedding it into a practical product, commercializing it is a more complex process
that needs comprehensive assessment of several factors. For a successful
commercialization of a technological invention, a company must consider thoroughly
its market potential and feasibility aside from its technical aspects.

According to (Turner, 1997), experience shows that even with careful assessment
and management, only 10% of projects will make a profit and 1% will have a
significant success. He also discussed that the lead time for new invention to be
commercialize takes at least five years. Hence, a careful assessment and evaluation
of a technology’s commercial potential might increase the chances of success.

Based on (Turner, 1997)’s paper, for the assessment and evaluation of inventions
and their commercialization, there areas to be considered. The following areas that
will be considered in analyzing the case are described as follows.

1. Technical Audit – Comparing the new discover or development with existing

products or process and seeks to identify its strengths and weaknesses and record
their commercial significant.
2. Intellectual Property Audit – Intellectual property can be a foundation for business.
Through the company’s operation, the business will create further confidential
information and the cycle of innovation continues. It is important to assess the IP
elements in the project, who owns the proprietary rights, whether there have been
any disclosures, how the rights can be protected, whether additional valuable Ip can
be created and the potential cost of IP protection and ownership.

3. Further Development Required – Inventions can rarely be readily commercialized

without further development. The requirements for further development involve the
time, resources and costs.

4. Market Assessment – This should examine market potential, growth and potential
returns. This section seeks the information on the diversity of products the invention
can be applied, value of markets, market size, competitive products and potential
allies.

5. Regulatory Issues – Regulations and laws governing the conduct of business can
affect the development and commercialization a product. It is necessary to check the
related government regulations in your company’s R&D projects. Time and cost in
complying with the laws should be considered in the planning of commercialization.
4. Analysis

Bell Labs became successful as an R&D center of AT&T in introducing radically

innovative products in the market, in different industries and in different period of
times.

4.1. Radical R&D

Looking into the characteristics and purpose of the Bell Labs, it is evident that they
have a radical research and development. Like in the radical R&D definition of
(Roussel, Saad, & Erickson, 1991), Bell Labs has both large amount of research and
development projects. Accordingly, Jon Garner said that there are …. __% of
research. Also, 1,200 employees that has PhDs may be a supporting detail that they
have intensive focus on research projects.

Another proof is mostly all of the inventions from Bell Labs are significantly new and
different in the existing projects. Also, mostly are science based. The example of
significantly new, different and science-based technology they invented are
transistors, silicon solar cell, communication satellites, charge coupled devices, laser
theory and cellular technology.

4.2 First Generation Management of R&D

Bell Labs is a classic example of an R&D center that operates in first generation
R&D.

First, Bell Labs has a technology-push approach in creating innovative products.

Their scientists and engineers do not interact with the other department of the
companies. They do not consider inputs from other company, and also from the
potential market. As Jon Garner said, _____ starts their project with a problem or
scientific understanding ……

They also focus on scientific breakthroughs

Based on the development of transistor, they started with the technical problems of
vacuum technology … Knowing its limitations and without first looking with the
transistor potential market and application.

Moreover, the most innovative years of Bell Labs happen near and on 1950 to mid-
1960s which is the years where first gen R&D is defined ….
In addition, Bell Labs management give autonomy and freedom to their scientists
and engineers.

According to Jon Garner, Bell Labs attachment to AT&T which is a monopolistic

company allows them to have enormous freedom to innovate and focus on long and
complex projects without pressure in funding and competitors.

4.3 Creating a creative and productive R&D organization

Aside from having a radical R&D nature and first-generation R&D management
approach, Bell Labs have hired the right people and formed the right teams that help
to develop several radical inventions.

4.3.1 Creative Person and Work

References
Nobelius, D. (2003). Towards the sixth generation of R&D management.

Roussel, P. A., Saad, K. N., & Erickson, T. J. (1991). Third Generation R&D: Managing the Link to
Corporate Strategy. Harvard Business Review.

Schilling, M. A. (2013). Strategic Management of Technological Innovation. McGraw-Hill.

Turner, J. V. (1997). Assesssment and Evaluation of Inventions and their Commercialization. WIPO
African Regional Seminar for Inventors and Researchers.

Tushman, M., & Anderson, P. (1986). Technological Discontinuities and Organizational

Environments. Administrative Science Quarterly.

Science and Engineering Indicators (2008). Washington, D.C.: National Science Board.

Leung, A. K. Y, W. W. Maddux, A. D. Galinsky, and. C. Y. Chiu (2008). Multicultural

experience enhances creativity: Then when and the how. American Psychologist 63,
169–181.

An innovation that builds on (renders obsolete) Existing knowledge and skills.

Whether an innovation is competence enhancing or competence destroying depends
on whose perspective is being taken. An innovation can be competence enhancing
to one firm, while competence destroying for another.

Innovations can also be classified as competence enhancing versus competence

Destroying. An innovation is competence enhancing from the
perspective of a particular firm if it builds on the firm’s existing knowledge base.

While an innovation
An innovation is considered to be competence destroying from the perspective of a
particular firm if the technology does not build on the firm’s existing competencies or
Radical R&D

Fundamental, incremental, radical

draws on foundation of existing scientific knowledge and engineering knowledge

that is insufficient alone to arrive at the desired practical results. The work
undertakes the discovery of new knowledge with the explicit goal of applying
knowledge to a useful purpose.

Progress toward this goal involves elements of discovery- that is, of learning things
not already known. Discovery involves substantial technical risk, cost and time.

There is never certainty that R&D will get – in a practical, cost effective way – all the
technical success needed for commercial success. If market success demea

In a radical R&D the risk is not always severe. Usually, projects of this kind begin as
exploratory projects, feasibility studies, intended to test the basic concepts on which
scientific foundation of the project rests.